La Jornada: Brent will average $113 from March to June: Oxford Economics

The conflict in the Middle East is already impacting the global energy market and its effects could extend beyond the military front.

The international consulting firm Oxford Economics estimated that the price of Brent crude oil – a benchmark in Europe – will average $113 per barrel in the second quarter of the year, due to the interruption in supply and persistent uncertainty about the reopening of the Strait of Hormuz.

The analysis center pointed out that, although the political discourse points to a possible resolution of the conflict in the short term, the economic times follow another logic.

In particular, the international consulting firm noted, the Strait of Hormuz remains practically closed, which has drastically reduced the flow of oil to international markets.

According to their estimates, the transit of oil tankers through the area fell around 98 percent compared to the levels prior to the start of hostilities, which has generated a significant disruption in the global supply of crude oil.

Oxford Economics expects this disruption to reach an average of 7.5 million barrels per day during the second quarter, which will maintain upward pressures on international oil prices even if the military conflict moderates in the coming weeks.

The firm warned that the release of strategic reserves and the reduction of inventories will lose effectiveness if the closure of the strait is prolonged, which could increase costs on a global scale.

The main risk identified is the absence of a clear route to reopen the Strait of Hormuz, a key point for global energy trade.

Although a partial recovery of maritime traffic is anticipated towards May or June, forecasts still lean towards a greater restriction on supply.

Oxford Economics is a UK-based macroeconomic analysis firm specializing in global projections and economic risk assessment. Their studies are used by companies, financial institutions and governments for decision making.

The analysis considerations are signed by its global chief economist, Ryan Sweet.

The analysis also warns that a possible escalation of the armed conflict – after the announcement of the intensification of military operations by the United States – could affect energy infrastructure and extend pressures on the oil market, with effects on inflation, transportation costs and economic activity at a global level.